Wednesday, February 22, 2006

Cent sense

I'm reading a prospectus on mutual funds and my eyes are literally and seriously rolling back into my head. Because of things going on in RL (tm), I thought this would be a good time to evaluate some of the finances and figure out what's what and where's what. Hence, the reading of the prospectus. I think I'm just an average Josephine when it comes to this kind of stuff; my dad's the rock star.

But the RL upheaval has necessitated the reading of the prospectus, and even though I do this kind of thing and under stand the concept of betas, expense ratios, etc., I'm still overwhelmed by what to do. Ideally, I'd like to forget about it all and hope for the best. It's possibly not the investment strategy that'll keep pace with inflation though, so hence, the bedtime reading.

My point is -- and I apologize for sounding incredibly arrogant here -- even with an MBA and a bachelor's in business and the fact that I spend chunks of my day working on financials, I'm still bewildered by this stuff. Should I pick that fund or this one? When should I sell out? Is my grid -- large, small, mid, versus value, cap, growth -- properly balanced? Is random Korean company a better bet than Pepsi? Should I pick Microsoft or Dell? How long do I hold 'em before I fold 'em?

It's for that reason I'm so incredibly convinced that diverting funds into personal accounts rather than having the whole chunk go into a Social Security fund is an awfully bad idea. No one has the time to read prospectus and re-balance their portfolios every month or even every quarter; you're doing good if you can get it all to make sense once a year. And what works this year may not work next year. It's the way of things.

Obviously, I'm ranting on an issue that's all but dead, but just doing this now reminds me how hard it is just to get the mix right, let alone trying to beat the stock market when the average Joe/Josephine is too harried by Real Life (tm) to sit down and actually figure out what's what.